• The FBM KLCI (+0.2%) bucked the negative sentiments in offshore stockmarkets to closed higher, buoyed by last-minute buying-support on selected heavyweights. Meanwhile, the lower liners extended its losses, with the exception of the FBM Small Cap (+0.1%), while the broader market closed mostly lower.

• Market breadth stayed negative with 548 decliners against 343 advancers, while traded volumes also declined 10.5% to 1.64 bln shares amid the risk-off in investors’ sentiments.

• Significant heavyweights which rallied on Monday were Digi (+18.0 sen), Tenaga (+18.0 sen), Hap Seng Consolidated (+6.0 sen), Petronas Dagangan (+6.0 sen) and Genting Malaysia (+5.0 sen). Meanwhile, Nestle (+RM1.04) led the broader market higher on expectations on resilient sales growth, followed by nitrile glove maker Hartalega (+24.0 sen), Lysaght (+23.0 sen), Hong Leong Industries (+14.0 sen) and Success Transformer (+14.0 sen).

• On the flip side, United Plantations (-86.0 sen), Dutch Lady (-62.0 sen), Heineken Malaysia (-24.0 sen) and Batu Kawan (- 18.0) traded lower. Panasonic Manufacturing (-60.0 sen) declined after reporting weaker 2QFY18 earnings. Main Board laggards, meanwhile, comprise of BAT (-80.0 sen), Petronas Gas (-36.0 sen), Hong Leong Financial Group (-20.0 sen), IJM (-9.0 sen) and Kuala Lumpur Kepong (-6.0 sen).

• Regional stockmarkets finished mostly lower, colored by negative sentiments spilled over from the Chinese equities amid the government’s crackdown on shadow banking. The Nikkei fell 0.2% on losses in materials and real estaterelated counters. Meanwhile, the Shanghai Composite index and the Hang Seng declined 0.9% and 0.6% respectively as investors monitor the rising bond yields in China. ASEAN stockmarkets, meanwhile, were mostly in the red at Monday’s closing bell.

• Major U.S. stockmarkets moved incrementally lower, dragged down by losses in chipmakers and weaker crude oil prices. The Dow (+0.1%), however, bucked the negative trend and closed with minute gains after Verizon Communications (+1.4%) and 3M (+1.1%) rallied. Meanwhile, the S&P500 (-0.04%) and the Nasdaq (-0.2%) narrowed amid mild profit-taking activities in chip stocks.

• European equities were splashed in red – due to the weakness in banking and oil stocks ahead of the OPEC meeting on Thursday. The FTSE (-0.4%) closed lower for the third-straight day, weighed down by miners, although partially offset by gains in GlaxoSmithKline. The DAX also lost 0.5%, amid continued political uncertainties in Germany, while the CAC finished down by 0.6% to 5,360.1 points.

The Day Ahead

• Although the key index managed to recoup all its intraday losses to close in the positive yesterday, we continue to think that the market undertone is still weak and it was only the selective buying by institutional funds that helped to keep the key index afloat yesterday. Still, we noted that the Malaysian stockmarket is already oversold and that a rebound is already due.

• Therefore, we think the recovery should persist over the near term, albeit the upsides are likely to remain muted due to the insipid market conditions. We also maintain our view that the key index will be attempting to build up a base around the 1,720 points level after its recent fall from the 1,800 points level.

• On the broader market and among the lower liners, we also think the buying interest is muted due to the continuing lack of fresh catalysts. Therefore, we also see little upside prospects for now as more retail players move to the sidelines.

Company Brief

• IHH Healthcare Bhd’s 3Q2017 net profit slipped 52.6% Y.o.Y to RM82.1 mln, dragged down by increased depreciation, amortisation and finance costs from the opening of two new hospitals in early 2017. Revenue for the quarter, however, rose 14.7% Y.o.Y to RM2.80 bln.

• For 9M2017, cumulative net profit rose 32.7% Y.o.Y to RM868.7 mln, while revenue for the period grew 11.8% Y.o.Y to RM8.26 bln. (The Star Online)

• Sunway Bhd's 3Q2017 net profit rose 5.0% Y.o.Y to RM150.9 mln, emanating from higher contribution from most of its business segments, particularly the property investment, construction and trading & manufacturing segments. Revenue for the quarter increased 16.8% Y.o.Y to RM1.32 bln.

• For 9M2017, net profit gained 13.9% Y.o.Y to RM455.7 mln. Revenue for the period improved 8.6% Y.o.Y to RM3.65 bln. (The Star Online)

• Zecon Bhd has inked a share purchase agreement for the proposed disposal of 49.0% equity interest in its unit, Zecon Medicare, to the state government of Sarawak for RM155.0 mln cash. Under the share purchase agreement, the proposed sale is conditional upon Zecon obtaining all the necessary approvals, the execution of relevant agreements as well as verification of shareholders' advances of about RM70.0 mln by the purchaser.

• Zecon Medicare is the concession holder of the proposed development of the UKM Specialist Children's Hospital. The concession period is 30 years, including a 54-month construction period. The proposed disposal is expected to be completed by 1H2018. The proceeds of the sale will go towards the repayment of bank borrowings and working capital requirements. (The Star Online)

• Glomac Bhd’s 2QFY18 net profit sank 92.3% Y.o.Y to RM1.4 mln, as the previous corresponding period include a one-off government grant totaling RM26.3 mln. Revenue for the quarter, however, climbed 30.9% Y.o.Y to RM109.9 mln.

• For 1HFY18, its net profit plunged 96.6% Y.o.Y to RM3.5 mln as revenue for the period fell 38.2% Y.o.Y to RM207.4 mln. (The Edge Daily)

• Manulife Holdings Bhd’s 3Q2017 net profit fell 41.1% Y.o.Y to RM7.5 mln as its life insurance business recorded higher claims and distribution channel expenses due its business expansion. Revenue for the quarter, however, improved 14.9% Y.o.Y to RM306.0 mln.

• Nevertheless, the group posted a net profit of RM21.4 mln for 9M2017, up 16.5% Y.o.Y, while revenue for the period climbed 17.4% Y.o.Y to RM951.1 mln. (The Edge Daily)

• Affin Holdings Bhd’s wholly-owned subsidiary, Affin Bank is seeking Bank Negara Malaysia's (BNM) go-ahead to acquire an additional 5.8% stake in AXA Affin General Insurance Bhd from an indirect subsidiary of Felda Global Ventures Holdings Bhd, Felda Marketing Services Bhd (Felma), for RM81.4 mln cash. This is in addition to the 7.1% equity interest the Affin is acquiring from Felma.

• If approved, the acquisitions will raise Affin Bank's total stake in the general insurance company from the current 37.1% to 49.9%. Back on 18th September 2017, BNM had approved Affin Bank's application to take up the initial 7.1% stake in AXA Affin GI from Felma. (The Edge Daily)

• China Stationery Ltd (CSL), whose share trade will be suspended on 5th December 2017, said it will not be able to release its financial results for 3Q2017 by 30th November 2017. The company noted it has not been able to contact its two remaining directors, namely Chan Fung @ Kwan Wing Yin and his son Angus Kwan Chun Jut; hence its board was unable to hold a meeting to approve its 3Q2017 results.

• Chan is the company's Chief Executive Officer and Chairman, while Kwan is its Executive Director. On 1st November 2017, CSL announced Kwan had resigned and that his resignation would take effect on 18th December 2017. Chan is the company's single largest shareholder with an 18.8% stake as at 31st March 2017, while Kwan had an indirect 18.7% stake. The company was also unable to obtain confirmations from third parties — including bankers, debtors, creditors, and courts, among others — to verify all litigation cases involving its subsidiaries in China. (The Edge Daily)

• Tiong Nam Logistics Holdings Bhd’s 2QFY18 net profit fell marginally by 0.1% Y.o.Y to RM13.0 mln, on higher operating expenses. Revenue for the quarter, however, grew 22.7% Y.o.Y to RM173.4 mln. ? For 1HFY18, cumulative net profit slipped 48.2% Y.o.Y to RM13.7 mln. Revenue for the period, however, improved 15.4% Y.o.Y to RM314.4 mln. (The Edge Daily)

• Eastern & Oriental Bhd (E&O) has taken up the remaining 4.4% stake it does not own in Bridgecrest Resources Sdn Bhd (BRSB) for RM33.0 mln. BRSB is an intermediate holding company of Tanjung Pinang Development Sdn Bhd, the holder of the concession to reclaim the Seri Tanjung Pinang land in Penang, and E&O Property (Penang) Sdn Bhd, the developer of the Seri Tanjung Pinang Phase 1 land. (The Edge Daily)

• Eversendai Corp Bhd's 3Q2017 net profit surged 186.1% Y.o.Y to RM20.8 mln on higher contributions from its structural steel and construction businesses in India, Thailand and Singapore, while it recorded lower losses from consolidation adjustment and eliminations. Revenue for the quarter climbed 21.0% Y.o.Y to RM449.3 mln.

• For 9M2017, cumulative net profit stood at RM56.7 mln vs. a net loss of RM64.4 mln in the previous corresponding period. Revenue for the period grew 6.5% Y.o.Y to RM1.31 bln. (The Edge Daily)

• RHB Bank Bhd’s 3Q2017 net profit dipped 3.3% Y.o.Y to RM488.8 mln, largely due to higher impairment losses on loans, operating expenses and lower non-fund based income. Revenue for the quarter declined marginally 1.1% Y.o.Y to RM2.62 bln.

• For 9M2017, cumulative net profit rose 4.9% Y.o.Y to RM1.49 bln, but revenue for the period decreased 1.7% Y.o.Y to RM7.87 bln. (The Edge Daily)

• QL Resources Bhd’s 2QFY18 net profit increased 18.4% Y.o.Y to RM59.8 mln, on higher revenue growth for the quarter of 10.9% Y.o.Y to RM808.9 mln.

• For 1HFY18, its net profit improved 10.1% Y.o.Y to RM102.0 mln, while revenue for the period grew 13.4% Y.o.Y to RM1.59 bln. (The Edge Daily)  

Source: Mplus Research - 28 Nov 2017